Gauri Shanker and ors. Vs. State of U.P. and ors. - Court Judgment

M. Katju, J.

1. Heard learned counsel for the parties.

2. This special appeal has been filed against the impugned judgment of the learned single Judge dated 7.8.2004. We have heard learned counsel for the parties and have carefully perused the impugned judgment.

3. The facts have been given in detail in the judgment of the learned single Judge and we are only referring to the same as and where necessary.

4. By the 73rd Constitutional amendment Article 243G was inserted in the Constitution of India. Article 243G reads as follows :

'243G. Powers, authority and responsibilities of Panchayats.- Subject to the provisions of the Constitution, the Legislature of a State may, by law, endow the panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-Government and such law may contain provisions for the devolution of powers and responsibilities upon Panchayats at the appropriate level, subject to such conditions as may be specified therein, with respect to-

(a) the preparation of plans for economic development and social justice ;

(b) the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule.'

5. By Government order dated 24.4.1999, copy of which is Annexure-2 to the special appeal, the employees of certain State Government departments were sent to work in different village Gram Panchayats. Thereafter it was apparently felt by the Government that the aforesaid Government order dated 24.4.1999 may be declared illegal by the Courts as the employer of these employees was being changed by the said Government order inasmuch as these employees being U.P. Government servants would become servants of Gram Panchayat. Hence with effect from 27.6.99 the U.P. Panchayat Raj Act was amended by U.P. Act No. 27 of 1999 which states as follows :

'25. Staff.-(I) Notwithstanding anything contained in any other provisions of this Act, any Uttar Pradesh Act, Rules, Regulations, or bye-laws or in any judgment, decree or order of any Court-

(a) the State Government may, by general or special order, transfer any employee or class of employees serving in connection with the affairs of the State to serve under Gram Panchayats with such designation as may be specified in the order and thereupon posting of such employee or employees in Gram Panchayats of a district shall be made by such authority in such manner as may be notified by the State Government.

(b) the employee or employees on being so transferred and posted in a Gram Panchayat, shall serve under the supervision and control of the Gram Panchayat on the same terms and conditions and with the same right and privileges as to retirement benefits and other matters including promotion as would have been applicable to him immediately before such transfer and shall perform such duties as may be specified from time to time by the State Government.

6. We may also refer to Section 25A which was introduced by the same amendment by U.P. Act No. 27 of 1999. Section 25A reads as follows :

'25A. Secretary.-The State Government, or such officer or authority as may be empowered by it in this behalf shall appoint a Secretary from amongst the employees referred to in Clause (b) of Sub-section (1) or Sub-section (2) of Section 25, who shall act as Secretary of such Gram Panchayat or Gram Panchayats, the Gram Sabhas concerned and the Nyaya Panchayats within whose territorial limits such Gram Panchayats are situated and perform such other duties as may be specified by the State Government or such officer or authority as may be empowered in this behalf by the State Government.'

7. Thus, by the new Section 25 the State Government was empowered to transfer certain Government employees to serve under Gram Panchayats which would have the power of supervision and control over them, but they were to continue to enjoy the same terms and conditions of service which they enjoyed before their transfer.

8. Subsequently by Government order dated 30.6.99 the Government order dated 12.4.99 was cancelled and a fresh Government order dated 1.7.99 was issued by which U.P. Government Servants of 8 departments were transferred under Section 25 (1) as Gram Panchayat Vikas Adhikaris to various Gram Panchayats vide Annexure-8 to the special appeal. The petitioners were working in 3 out of these 8 departments whose employees were transferred namely Kisan Sahayak of Agriculture department, Cane Supervisor of Cane department, and Gram Vikas Adhikari of Rural Development department in the year 2001. Out of the 8 categories of State Government employees who had been transferred to Gram Panchayats 3 categories were sent back to the State Government, but not the petitioners. Thereafter the impugned order dated 20.7.2004 was passed by which the petitioners and others in the above 3 categories namely Kisan Sahayak, of Agriculture department, Cane Supervisor of Cane department, and Gram Vikas Adhikari of Rural Development department were also transferred back to the State Government to their respective departments.

9. The submission of Sri Ashok Khare learned counsel for the appellants is that the appellants having been transferred to the Gram Panchayat cannot be sent back to the State Government, as they are no longer State Government employees. We do not agree.

10. It has been held by a Division Bench of this Court in Writ Petition No. 33920 of 1999 with Special Appeal No. 591 and 709 of 1999, Manbodh Kumar Lal v. State of U. P., decided on 1.2.2000 that the State Government employees who were sent to the Gram Panchayats under Section 25 (1) continue to be Government employees. The Division Bench relied on the Supreme Court decision in State of Gujarat v. Raman Lal Keshav Lal Soni : (1983)ILLJ284SC . In paragraph 51 of the aforesaid decision of the Supreme Court it has been observed :-

'51. Now, in 1978 before the Amending Act was passed, thanks to the provisions of the Principal Act of 1961, the ex-municipal employees who had been allocated to the Panchayat Service as Secretaries, Officers and servants of Gram and Nagar Panchayats, had achieved the status of Government servants. Their status as Government servants could not be extinguished, so long as the posts were not abolished and their services were not terminated in accordance with the provisions of Article 311 of the Constitution. Nor was it permissible to single them out for differential treatment. That would offend Article 14 of the Constitution. An attempt was made to justify the purported differentiation on the basis of history and ancestry, as it were. It was said that Talatis and Kotwals who became Secretaries, Officers and servants of Gram and Nagar Panchayats were Government servants, even to start with, while municipal employees who became such Secretaries, Officers and servants of Gram and Nagar Panchayats were not. Each carried the mark or the 'brand' of his origin and a classification on the basis of the source from which they came into the service, it was claimed, was permissible. We are clear that it is not. Once they had joined the common stream of service to perform the same duties, it is clearly not permissible to make any classification on the basis of their origin. Such a classification would be unreasonable and entirely irrelevant to the object sought to be achieved. It is to navigate around these two obstacles of Article 311 and Article 14 that the Amending Act is sought to be made retrospective to bring about an artificial situation as if the erstwhile municipal employees never became members of a service under the State. Can a law be made to destroy today's accrued constitutional rights by artificially reverting to a situation which existed seventeen years ago? No.'

A perusal of the above observations of the Supreme Court shows that once a person gets the status of a Government servant he cannot be deprived of that status unless the post is abolished or his service is terminated in accordance with the provisions of Article 311 of the Constitution.

11. It may be noted that in the aforesaid decision of the Supreme Court the factual position was that certain employees of Municipalities had by an amendment of 1961 been made employees of the State Government. Thereafter in the year 1978 another Act was passed purporting to again revert their status to that of Municipalities employees instead of State Government employees. In this connection the Supreme Court observed : 'Their status as Government servant could not be extinguished, so long as the posts were not abolished and their services were not terminated in accordance with the provisions of Article 311 of the Constitution'. The Supreme Court went on to observe that once the Municipality employees became Government servants then they join the common stream of Government employees and they could not be treated differently from employees who had right from the beginning been Government servants. The Supreme Court further observed that once a person becomes a Government servant certain constitutional rights accrue to him, and if he is deprived of his status of a Government servant there would be violation of Article 14 of the Constitution. The present case is an even better case since the appellants in the present case from the beginning had been Government servants. Hence, we are of the view that the Division Bench decision in Manbodh Kumar Lal's case (supra) holding that the employees sent to the Gram Panchayat continue to remain Government servants is correct and we respectfully agree with the said view. The same view has been taken by a learned single Judge in Krishna Kant Tiwari and Anr. v. State of U. P. and Ors. : 2002(1)AWC709 vide paragraph 26.

12. In the aforesaid decision it has been held that such Government employees who were sent to the Gram Panchayats under Section 25 are on deputation to the Gram Panchayats. The aforesaid decision was confirmed by a Division Bench of this Court in Special Appeal No. 94 of 2002, Krishan Kant Tiwari v. State of U. P., decided on 28.1.2002. Against the Division Bench decision a S.L.P. was filed in the Supreme Court which has been dismissed. Subsequently, the same view was reiterated by a learned single Judge in Writ Petition No. 31085 of 2004, Subash Chand Pandey v. State of U. P., decided on 20.8.2004. We respectfully agree with the view taken in these decisions and hold that the appellants/petitioners are still U.P. Government servants and they have to be treated as on deputation to Gram Panchayats for the period during which they were posted there.

13. Section 25 can have two interpretations : (1) that the employer of the transferred employee is changed on such transfer, and it becomes the Gram Panchayat, (2) the employer is not changed on such transfer, and it remains the State Government, while the employee is regarded as on deputation to the Gram Panchayat.

14. Learned counsel for the appellants submitted that the appellants cannot be treated as on deputation. He relied on the language of the Section 25 in which it is stated that the State Government can transfer its employees to serve under Gram Panchayats. We have already observed that if it is held that State Government employees can be deprived of their status of State Government employees and regarded as employees of the Gram Panchayat then this will be in violation of Articles 14 and 311 of the Constitution as held by the Constitution Bench decision of the Supreme Court in State of Gujarat v. Ramanlal (supra). It is well settled that if two interpretation of a statute are possible then the interpretation which makes the statute constitutional should be preferred to the one which makes it unconstitutional. Hence we have to hold that persons sent on transfer by the State Government to the Gram Panchayat are being sent on deputation, for logically there is no other view we can take (unless we take a view which makes Section 25 unconstitutional).

15. It is well settled that there is a presumption in favour of the constitutional validity of a Statute [Vide Chiranjit Lal v. Union of India. 1950 SCR 869, Madhu Limaye v. S.D.A., : 1971CriLJ1720 ; P.J. Krishnalal v. Government of Kerala, 1995 AIR SCW 1325, Jilu Bhai Nan Bhai v. State of Gujarat : AIR1995SC142 etc.)

16. If two interpretations are reasonably possible the Court should take an interpretation which would uphold the constitutional validity of the statute even if that involves narrowing down the scope of the statutory provision.

17. In Mark Netto v. State of Kerala : [1979]1SCR609 (vide para 6) a Constitution Bench decision of the Supreme Court read down a statutory provision so as to make it constitutional. In that case the constitutional question was whether Rule 12 (iii) of the Kerala Tax Rules, 1959 was violative of Article 30 of the Constitution. A plain and literal interpretation of the provision would make it violative of Article 30 of the Constitution, and hence the Supreme Court narrowed down the scope of the said rule so as to sustain its validity.

18. Similarly in Sunil Batra v. Delhi Administration : 1978CriLJ1741 [vide para 38) another Constitution Bench decision of the Supreme Court observed :

'Constitutional deference to the Legislature and the democratic assumption that people's representatives express the wisdom of the community lead Courts into interpretation of statutes which preserves and sustains the validity of the provision.'

19. There is always a presumption that the Legislature does not exceed Its jurisdiction [Vide Union of India v. Elphinstone Spinning and Weaving Co. Ltd.. : [2001]1SCR221 , State of Bihar v. Bihar Distillery Ltd. : AIR1997SC1511 ] etc.

20. It follows from the above principle that if one construction of the statute will make it ultra vires whereas another construction will sustain its constitutional validity the Court should prefer the latter on the ground that the Legislature is presumed not to have intended to exceed its jurisdiction [Vide Union of India v. Tulsiram Patel : [1986]2SCR581 , State of Kerala v. Krishnan Nayar : [1978]2SCR864 ; Rayala Corporation v. Director of Enforcement, AIR 1970 SC 494 (499) ; Jothi Timber Mart v. Calicut Municipality : [1970]1SCR629 ; Venkataraman and Co. v. State of Madras : [1966]60ITR112(SC) ; Corporation of Calcutta v. Liberty Cinema : [1965]2SCR477 ; Govindlalji v. State of Rajasthan : [1964]1SCR561 ; Kedarnath v. State of Bihar : AIR1962SC955 : State of Bihar v. Charusiladasi : AIR1959SC1002 and Express Newspapers Ltd. v. Union of India : (1961)ILLJ339SC ].

21. It is a well-settled principle of interpretion that the general words in a statute may be construed narrowly in order to sustain its validity [Vide New Delhi Municipal Committee v. State of Punjab : AIR1997SC2847 ]. Hence if it is possible to read a statutory language as subject to an implied term to sustain its validity the Court should be very ready to make such an implication [Vide A.G. Gambia v. Momodon Jobe, (1984) AC 689 (702) (PC), Hector v. Attorney General of Antique and Barbuda, (1990) 2 All ER 103, p 107 (PC).

22. In re, Hindu Women's Right to Property Act , the Federal Court upheld the validity of the Hindu Women's Rights to Property Act, 1947 by construing the word 'property' as meaning property other than agricultural land.'

23. In that decision Gwyer, C.J., observed :

'If that word 'property' necessarily and inevitably comprises all forms of property, including agricultural land, then clearly the Act went beyond the powers of the Legislature, but when a Legislature with limited and restricted powers makes use of a word of such wide and general import, the presumption must surely be that it is using it with reference to that kind of property with respect to which it is competent to legislate and to no other.'

24. The learned Chief Justice further observed :

'There is a general presumption that a Legislature does not intend to exceed its jurisdiction, and there is ample authority for the proposition that general words in a statute are to be construed with reference to the powers of the Legislature which enacts it.'

25. The above rule was applied by the Supreme Court in Kedarnath v. State of Bihar : AIR1962SC955 , and the Supreme Court took a narrow construction of Section 124A of the Indian Penal Code so as to avoid making it unconstitutional in view of Articles 19(1)(a) and 19(2) of the Constitution.

26. Section 124A of the Indian Penal Code which relates to sedition makes a person punishable who by words either spoken or written or by sign or visible representations or otherwise, brings or attempts to bring into hatred or contempt, or excites disaffection towards the Government established by law.'

27. A perusal of the above provision shows that if it is construed in a plain or wide manner it will violate Articles 19(1)(a) and 19(2) of the Constitution. Hence, the Supreme Court, in order to make the provision constitutionally valid, limited the scope 'to acts involving intention or tendency to create disorder or disturbance of law and order or incitement to violence.'

28. Sinha, C.J., speaking for the Court in that decision observed :

'It is well-settled that if certain provisions of law, construed in one way, would make them consistent with the Constitution, and another interpretation would render them unconstitutional, the Court would lean in favour of the former construction.

29. In Sunil Batra v. Delhi Administration (Supra) the Supreme Court upheld the validity off Section 30(2) of the Prisons Act, 1894, which provides for solitary confinement of a prisoner under sentence of death in a cell and Section 56 of the same Act, which provides for the confinement of a prisoner in irons for his safe custody, by construing these provisions narrowly so as to avoid their being declared invalid on the ground that they were violative of the rights guaranteed under Articles 14, 19 and 21 of the Constitution.

30. Similarly, in New India Sugar Mills v. Commissioner of Sales Tax : AIR1963SC1207 , a wide definition of the word 'sale' in the Bihar Sales Tax Act, 1947, was restricted by construction to exclude transactions in which property was transferred from one person to another without any previous contract of sale, since a wider construction would have resulted in attributing to the Bihar Legislature an intention to legislate beyond its competence.

31. In New Delhi Municipal Committee v. State of Punjab : AIR1997SC2847 , provisions in the municipal laws levying property tax on lands and buildings did not contain any exception in respect of the property of the State. These provisions was upheld by taking a narrow construction by excluding the property of the State since such property is exempted from taxation under Article 289 of the Constitution. Although the aforesaid provisions did not expressly exclude property of the State from taxation, yet by adopting a narrow construction the validity of the provisions was sustained.

32. In Govindlalji v. State of Rajasthan : [1964]1SCR561 , the words affairs of the temple occurring in Section 16 of the Rajasthan Nathdwara Temple Act were construed as restricted to secular affairs, as on a wider construction the section would have violated Articles 25 and 26 of the Constitution.

33. In R.L. Arora v. State of U. P. : [1964]6SCR784 the Supreme Court while construing Section 40(1)(aa) of the Land Acquisition Act, as amended by Act 31 of 1962 construed the words 'building or work' to such building or work which would subserve the public purpose of the industry or work in which the company for which acquisition is made, is engaged. A wider and literal construction of the clause would have brought it in conflict with Article 31(2) of the Constitution, and hence the narrower construction was adopted.

34. In Indian Oil Corporation v. Municipal Corporation : AIR1993SC844 . Section 23, of the Punjab Municipal Corporation Act, 1976 which empowered the Corporation to levy octroi on articles and animals imported into the city' was read down to mean articles and animals 'imported into the municipal limits for purposes of consumption, use or sale, since a wide construction would have made the provision unconstitutional being in excess of the power of the State Legislature conferred by Entry 52 of List II of 7th Schedule.

35. In Union of India v. Elphinstone Spinning & Weaving Co. : [2001]1SCR221 , the Supreme Court observed :

'It is also a cardinal rule of construction that if one construction being given the statute will become ultra vires the powers of the Legislature whereas on another construction which may be open, the statute remains effective and operative, then the Court will prefer the latter, on the ground that the Legislature is presumed not to have intended an excess of jurisdiction.'

36. In Corporation of Calcutta v. Liberty Cinema, : [1965]2SCR477 the Supreme Court observed that a statute has to be read so as to make it valid and. if possible, an interpretation leading to a contrary position should be avoided. It has to be construed ut res magis valeat quam pareat (vide Broom's Legal Maxims (10th Ed.) p. 361, Craies on Statute (6th Ed.) p. 95, Maxwell on Statutes (11th Ed.) p. 221, and Cooley's Constitutional Limitations. In the aforesaid decision the word 'fee' in Section 548 of the Calcutta Municipality Act was read as meaning a tax. for any other reading would make the section invalid.

37. In State of Bihar v. Smt. Charusila Dasi : AIR1959SC1002 , the Supreme Court observed :

'It is now well settled that there is a general presumption that the Legislature does not intend to exceed its jurisdiction, and it is a sound principle of construction that the Act of a sovereign Legislature should, if possible, receive such an interpretation as will make it operative and not inoperative.'

38. Sri Ashok Khare learned counsel for the appellants then submitted that Section 25, if understood to mean that it results in change of the employer from the State Government to the Gram Panchayat, cannot be treated as unconstitutional as it does not violate any fundamental right. We do not agree. A statute will be invalid if it violates any of the provisions of the Constitution (except the Directive Principles), and not only if it violates a fundamental right.

39. According to the eminent jurist Kelsen, in every country there is a hierarchy of laws and if there is a conflict between a law in a higher layer of the hierarchy and one in a lower layer, then the law in the lower layer has to be declared ultra vires.

40. In our country, the hierarchy is like this :-

1. The Constitution of India.

2. Statutory law, which may be either Parliamentary law or law made by the State Legislature.

3. Delegated legislation which may be in the form of Rules made under a statute, regulations made under a statute, etc.

4. Government orders, Executive instructions etc.

41. Article 311 of the Constitution is in the very first layer in this hierarchy, and hence if any law in the second, third, or fourth layer of the hierarchy violates Article 311 or Article 14, the said law will have to be held ultra vires. If we accept the submission of Shri Khare that on transfer to the Gram Panchayat the employer ceases to be State Government, there will be violation of Articles 311 and 14 of the Constitution as held by the Constitution Bench of the Supreme Court in the State of Gujarat case (supra).

42. Accordingly, we are of the view that the appellants and other similar employees were only on deputation to the Gram Panchayat. It is well-settled that a deputationist has no right to remain on deputation and he can be sent back to his parent department at any time vide Kunal Nanda v. Union of India : (2000)5SCC362 , State of Punjab v. Index Singh : (1997)8SCC372 . Mahesh Kumar Parmar v. S.I.G., : (2002)9SCC485 and Ratilal Soni v. State of Gujarat : (1990)ILLJ525SC etc. Hence the appellants have no right to remain on deputation in the Gram Panchayats.

43. Sri Ashok Khare learned counsel for the appellants then submitted that the impugned Government order dated 20.7.2004 is illegal because while it withdraws the appellants and other similarly placed employees to the parent organisation, that is the State Government, it is again sending them back to work at the Gram Panchayat level and under the administrative and financial control of the Gram Panchayat. The learned single Judge while dismissing the writ petition on 6.8.2004 observed :

'For the reasons and observations to be followed the writ petition is dismissed, subject to condition that the petitioner shall not be compelled to discharge duty under the administrative and financial control of the Gram Panchayat. State Government shall pass appropriate Government order forthwith in the light of observation made in the judgment.'

44. The words 'subject to condition that the petitioner shall not be compelled to discharge duty under the administrative and financial control of the Gram Panchayat' in effect nullifies that part of the Government order dated 20.7.2004 in which it has been held that the employees posted at the Gram Panchayat level will work under the administrative and financial control of the Gram Panchayat. We do not agree with this condition placed by the learned single Judge in his order dated 6.8.2004. It is always open to an employer to tell an employee under whose supervision and control the employee will work. For instance, if A appoints a servant and tells him to work in the house of B under the supervision and control of B, that servant continues to be the servant of A because A appointed him, A pays him salary and A can terminate his service even if his servant is working under the supervision and control of B. B cannot terminate his service ; he can only send him back to A. Hence since the appellants are the servants of the Government it is for the Government to decide under whose supervision and control they will work. The Government is the master and the Government can send its servants to work under the control of the Gram Panchayat. We see nothing strange or arbitrary in this. However, we make it clear that the Gram Panchayat cannot terminate the service of the appellants.

45. It is no doubt true that the prima facie test of the employer-employee relationship is the supervision and control test. However, as held by the Supreme Court in Shining Tailors v. Industrial Tribunal : (1983)IILLJ413SC , in recent times emphasis in the field has shifted from and no longer rests exclusively or strongly upon the question of control. A search for a formula in the nature of a single test will hence not serve any useful purpose, and several factors have to be considered. As held in Ram Singh v. Union Territory. : (2004)1SCC126 a multiple pragmatic approach has now to be adopted. As observed in Indian Overseas Bank v. I.O.B. Staff Canteen Workers Union. 2000 (2) AWC 1571 (SC) : AIR 2000 SC 1508 :

'It would be not only impossible but also not desirable to lay down abstract principles or rules to serve as a ready reckoner for all situations and thereby attempt to compartmentalize and peg them into any pigeon-hole formulae, to be insisted upon as proof of such relationship.'

46. Hence, even though the transferred employees were working under the supervision and control of the Gram Panchayats that does not necessarily mean that such employees became employees of the Gram Panchayats.

47. In view of the interpretation of 25A which we have taken it follows that the employees on deputation to the Gram Panchayat who were withdrawn by the G.O. dated 20.7.2004 and then by the same G.O. posted at Gram Panchayat level under the administrative and financial control of the Gram Panchayats will certainly be employees covered by Section 25 (1) (b) of the Act. Hence they can be appointed as Secretaries under Section 25A.

48. We make it clear that we have only held that such persons can be appointed as Secretary, and not that they must be appointed as Secretary. It is entirely in the discretion of the State Government (or such Officer of authority as may be empowered on this behalf) as to who amongst such employees should be appointed as a Secretary, and we are not interfering with that discretion. However, we are of the opinion that there must be some objective criteria as to who should be appointed as Secretary under Section 25A, otherwise there will be complaints of pick and choose, casteism, nepotism, discrimination, favouritism, etc. It must be remembered that the Secretary will have a lot of funds at his disposal, and hence most persons covered by Section 25 (1) (b) would like to become a Secretary. We, therefore, direct the State Government to fix objective rational criteria and procedures for appointing Secretaries under Section 25A.

49. As regards the Government order dated 20.7.2004 we clarify that if certain employees have been sent back from the Gram Panchayat to the parent department but they have been again posted at Gram Panchayat level under the administrative and financial control of the Gram Panchayat, such employees will be employees covered by Section 25 (1) (b) and hence will be within the zone of consideration for being appointed as Secretaries under Section 25A. However, if an employee after being repatriated from the Gram Panchayat to the State Government is not posted at the Gram Panchayat level under the financial and administrative control of the Gram Panchayat then he will not be in the zone of consideration for being appointed as Secretary under Section 25A.

50. With these observations this appeal is disposed of.